Afghanistan currently faces a sea of uncertainty. Outcomes of the September 2019 presidential elections are not yet known, and preliminary results have been challenged.
... Exibir mais + Insecurity continues, with government and insurgent operations imposing an increasing burden in terms of civilian casualties. Negotiations between the US and the Taliban have recently resumed, but prospects for and the contents of any eventual political settlement remain unclear. In the meantime, the duration and extent of continued international security support is being questioned. While international grants continue to finance 75 percent of public expenditure, current aid pledges expire at the end of 2020, with some major donors signaling intentions to significantly reduce support. This context of uncertainty has fundamental implications for the economy, with growth and investment constrained by weak confidence.
Exibir menos -

The Afghanistan Development Update is a twice-annual publication providing analysis of recent developments and presenting the World Bank team’s most-recent macroeconomic projections.
... Exibir mais + The August 2018 edition focuses on the state of the economy in the context of upcoming elections, and the potential for a loss of recent momentum as confidence declines. Special topics address: i) the potential for trade to underpin development in Afghanistan; ii) recent trends in poverty and welfare; and iii) priorities for improving education quality and coverage. Afghanistan has experienced slow growth since 2014, with the draw-down of international security forces, accompanying reductions in international grants, and a worsening security situation (growth has averaged 2.3 percent between 2014-2017). Following a period of political instability after the 2014 elections, the economy has slowly regained momentum as reforms have been implemented and confidence restored. From a low of 1.5 percent in 2015, real GDP growth accelerated to 2.3 percent in 2016, and is estimated at 2.7 percent for 2017. Building momentum now appears to be at some risk, with increasing election-related violence, declining business confidence, worsening drought conditions, and some apparent slowing of economic activity. Growth is projected at 2.4 percent in 2018, with substantial downside risks arising from the prospects of political instability around upcoming parliamentary and presidential elections. Risks can be partly mitigated and recent momentum maintained through: i) continued reform progress, demonstrating to investors that the deterioration in governance seen in 2014 will not be repeated; and ii) continued donor commitment to sustained grant support.
Exibir menos -

Afghanistan’s security environment is continuing to deteriorate. The increased conflict appears to be holding back business and consumer confidence from recovering fully from the impact of the security transition in 2014.
... Exibir mais + Economic growth has increased moderately from 2014-15, when the lowest growth rate was recorded since 2003. Proxy data for the first half of 2017 indicates that economic activity is continuing to languish, while business sentiment, gauged from the quarterly business perception surveys, appears to have improved slightly between the first and second quarters of 2017, though it remains lower than in the second quarter of 2016. The annual economic growth rate is projected to reach 2.6 percent in 2017, increasing very slightly from the figure of 2.2 percent recorded in 2016. Growth is projected to edge up to 3.2 percent in 2018, assuming no further deterioration in the security environment. While this constitutes a moderate improvement compared to 2014 and 2015, it is still significantly below the 9.6 percent average annual rate recorded in the period from 2003 to 2012.
Exibir menos -

Growth in developing East Asia and Pacific (EAP) continues to be resilient and in line with previous expectations. Already robust domestic demand has been supported by some pickup in external demand and the gradual recovery in commodity prices.
... Exibir mais + Fiscal deficits in the major regional economies widened in 2016, prompting some adjustment toward the end of the year in Indonesia and Malaysia. Monetary policies remained accommodative, and credit continued to grow rapidly in most major economies. Inflation is edging up and producer prices are rising quickly as commodity prices increase. Capital outflows intensified toward end-2016 leading to depreciation pressures, but financial markets have since recovered. The growth outlook for 2017–19 remains broadly positive across the region. China is expected to continue its gradual transition to lower, more sustainable growth. In the rest of the region, growth is projected to pick up moderately. Continued buoyancy in domestic demand, including public and increasingly private investment, will be supported by gradually strengthening external demand. Global growth and commodity prices are projected to continue recovering slowly, while global financial conditions tighten gradually. Inflationary pressures should remain contained. In the Pacific Island Countries, maintaining fiscal sustainability needs to remain a focus along with policy reforms in selected sectors, which could prove transformational over the medium term. For fiscal sustainability, efforts to shore up revenues, contain unproductive spending while boosting critical expenditures on health and education, and build up buffers against shocks need to be sustained. There are also opportunities to accelerate growth and boost employment over the longer term. On tourism, promising options include tapping into the Chinese and retiree market, increasing the number of luxury resorts, and encouraging cruise ships to base in the Pacific. Increases in labor mobility, through the expansion of existing agreements and the negotiation of new agreements, complemented by investments in workers’ human capital, could also generate substantial benefits. Higher mobile and internet penetration, complemented by a conducive business environment and the development of a skilled workforce could boost productivity. And income from fisheries could be significantly increased, without threatening the sustainability of the fisheries stock, by broadening participation in cooperative agreements to include East Asian countries with major fishing grounds, such as the Philippines and Indonesia, and ensuring compliance with robust catch limits.
Exibir menos -

Mongolia's growth further slowed to 1.4 percent (y/y) in the first half. The budget deficit sharply widened in Jan.-July, and will likely reach over 18 percent of GDP in 2016.
... Exibir mais + Corrective actions have been announced by the new government to curb the rising budget deficit, and further actions are needed to reduce the deficit and debt to sustainable levels. Monetary policy loosened due to significant monetization of government programs. The policy rate hike by 450 bps by the BoM eased exchange rate volatility, after almost 15 percent depreciation from end June to mid-August.
Exibir menos -

In the six months since the previous East Asia and Pacific (EAP) economic update, developing EAP has faced a challenging external environment. Financial market conditions in the region, however, have been volatile over much of the past 6 months, as in the rest of the world.
... Exibir mais + Over the next two to three years, growth in developing EAP is expected to ease modestly. Poverty in developing EAP has declined rapidly in recent years, and is projected to fall further with continued growth; however, in several countries the pace of poverty reduction has been restricted by limited labor market opportunities, particularly for disadvantaged groups. The positive outlook for growth and poverty reduction in the region in this base case is subject to elevated risks. The outlook for the Pacific Island Countries (PICs) is heavily dependent on their ability to overcome geographic constraints and take advantage of the relatively narrow set of opportunities available to them. Sustaining the pace of poverty reduction will require measures to enhance the business environment, improve education and health outcomes, and strengthen social safety nets.
Exibir menos -

Mongolia’s budget deficit is widening fast, with a large revenue shortfall. Early budget spending control measures are needed to contain rising expenditures, as weak commodity prices would continue to constrain revenues.
... Exibir mais + Government was able to raise $750 million via syndicated loans and a sovereign bond issuance. Despite the recent external financing, the underlying pressure on the balance of payments is expected to remain high in 2017. Mineral exports have been hit hard by weaker terms of trade. Imports continued to fall, but at a slower pace in the first quarter. BoM’s housing mortgage assets were transferred to the government in March.
Exibir menos -

Exports sharply declined in the final three months of 2015, signaling further weakening of external demand. Imports continued to drop but machinery imports rebounded in Nov-Dec.
... Exibir mais + Gross international reserves moderately declined to $1,323 million in Dec. The exchange rate depreciated above MNT 2,000 against the US$ in Jan. Inflation decelerated further to below 2 percent in Mongolia’s sovereign bond yields rose above 11 percent. The BoM lowered its policy rate to 12 percent in Jan by 100 bps. The subsidized mortgage program is to be further expanded to boost the construction industry. The annual budget deficit reached MNT 1,163 billion in 2015, close to the deficit target of the second supplementary budget.
Exibir menos -

Exports sharply declined in the final three months of 2015, signaling further weakening of external demand. Imports continued to drop but machinery imports rebounded in Nov-Dec.
... Exibir mais + Gross international reserves moderately declined to $1,323 million in Dec. The exchange rate depreciated above MNT 2,000 against the US$ in Jan. Inflation decelerated further to below 2 percent in Mongolia’s sovereign bond yields rose above 11 percent. The BoM lowered its policy rate to 12 percent in Jan by 100 bps. The subsidized mortgage program is to be further expanded to boost the construction industry. The annual budget deficit reached MNT 1,163 billion in 2015, close to the deficit target of the second supplementary budget.
Exibir menos -

Mongolia’s growth sharply slowed to 3.0 percent in the first half of 2015. External demand is weakening due to a continued dampening of the commodity market and slower growth in China, translating into a drop in exports.
... Exibir mais + Slowing domestic demand is largely caused by a plunge in investment due to falling foreign direct investment (FDI). Measures were taken to curb the budget deficit, debt, and off-budget expenditures. New deficit and debt ceilings were set for 2015-18 by amending the fiscal stability law (FSL) in January. The 2015 budget was amended in January to curb the structural deficit within 5 percent of gross domestic product (GDP). Growth is expected to slow in 2015-16, but a recovery in foreign investment will begin to support the growth of the non-mining sector in 2016. The Development Bank of Mongolia (DBM) is expected to provide about Mongolian Tughrik rates (MNT) 600 billion to its commercial portfolio in 2015, and to further reduce its commercial spending to MNT 300-400 billion in the next couple of years due to tight financing conditions. Under these assumptions, the commercial projects financed by the DBM are expected to around 3 percent of GDP in 2015, and decline to 1-1.5 percent of GDP in 2016.
Exibir menos -

Mongolia’s growth sharply slowed to 3.0 percent in the first half of 2015. External demand is weakening due to a continued dampening of the commodity market and slower growth in China, translating into a drop in exports.
... Exibir mais + Slowing domestic demand is largely caused by a plunge in investment due to falling foreign direct investment (FDI). Measures were taken to curb the budget deficit, debt, and off-budget expenditures. New deficit and debt ceilings were set for 2015-18 by amending the fiscal stability law (FSL) in January. The 2015 budget was amended in January to curb the structural deficit within 5 percent of gross domestic product (GDP). Growth is expected to slow in 2015-16, but a recovery in foreign investment will begin to support the growth of the non-mining sector in 2016. The Development Bank of Mongolia (DBM) is expected to provide about Mongolian Tughrik rates (MNT) 600 billion to its commercial portfolio in 2015, and to further reduce its commercial spending to MNT 300-400 billion in the next couple of years due to tight financing conditions. Under these assumptions, the commercial projects financed by the DBM are expected to around 3 percent of GDP in 2015, and decline to 1-1.5 percent of GDP in 2016.
Exibir menos -

Mongolia’s economic growth in Q1 2015, slowed to 4.4 percent (y/y), down from 8 percent in the previous quarter. Mineral gross domestic product (GDP) growth softened to 13.8 percent (y/y) in the first quarter from 20.5 percent in the previous quarter.
... Exibir mais + Non-mineral GDP growth dropped to 1.5 percent (y/y) in the first quarter, from 4.1 percent of the previous quarter. The composition of jobs indicates deteriorating quality of labor market conditions. The current account deficit slightly widened to 80.4 million dollars in April amidst a narrowing trade surplus. The capital and financial account displayed a net outflow of 125.7 million dollars over the first four months. The balance of payments deficit reached 320 million dollars over the first four months, reflecting a 49 million dollars deficit in April. Revenue shortfalls reached 18 percent in the first five months, requiring a supplementary budget to ensure the credibility of the fiscal plan.
Exibir menos -